МAGAZIN MAGAZINOV
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
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HIGHLIGHTS
 NEW MOSCOW
On July 1, 2012 Moscow territory enlarged 2.5 times and more. The two
newly added administrative districts have no high-quality shopping
1
centers so far . That said, city border change didn’t affect the total
capacity of the Moscow retail property market at all.
 NEW RECORDS
The volume of new retail space supply in Moscow malls continued to
decrease, dropping to decade low.
 DEMAND GROWTH
During 2012, vacancy rate in Moscow shopping centers went down to
2.7% due to high demand from retailers and the shortage in new modern
shopping centers supply to be seen since 2011
 RENT RATES INCREASE
Rent rates in Moscow shopping centers have grown by 7 to 10% over the
year.
 AMBITIOUS PLANS
A number of large retail schemes were announced in 2012 e.g. Butovo
Mall, Galaktika, Avia Park, Columbus, VEGAS and GoodZone.
 STREET RETAIL RENTS ESCALATION
By the end of 2012, some retail streets saw the growth of rental rates.
Average rates for the most sought-after retail space formats within key
retail corridors reached USD6,000–7,000/sq m/year.
 LONG-AWAITED OPENING
Russia's first professional outlet center, Outlet Village Belaya Dacha,
opened at Novoryazanskoe Highway.
1
- According to MAGAZIN MAGAZINOV, Mega Teply Stan, like other similar objects located along the Moscow Ring Road (MKAD),
is included in ‘older’ Moscow.
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
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MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
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SUPPLY
During 2012, seven modern shopping centers were
commissioned in Moscow to total 169,800 sq m GLA. We find
Moscow Gallery and Kaleidoscope the most interesting ones.
SHOPPING CENTERS COMMISSIONED IN MOSCOW IN 2005–2012
Moscow Gallery with 28,000 sq m GBA and 21,000 sq m GLA
with three retail levels is located in the very heart of Moscow,
in the reconstructed Moscow Hotel to open soon. The main
anchor today is the first PODIUM Market, a 7,000 sq m
department store; the second anchor, a multiplex premium
level cinema of about 5,000 sq m, is scheduled for 2013.
Kaleidoscope includes retail and office premises, with the total
GBA nearly 120,000 sq m. Located close to Skhodnenskaya
metro station. With GBA of approximately 70,000 sq m and
GLA of 41,000 sq m Kaleidoscope’s retail part features
4 levels and 2 parking levels to host 930 cars. The anchors
include Perekrestok, M.Video, Detsky Mir, and Sportmaster.
The entertainment area consists of an 8-hall cinema, an
entertainment center, and a kids' zone.
Other commissioned in 2012 shopping centers are Sombrero,
nd
nd
Gorod na Ryazanke (2 phase), Parus, and Otrada (2
phase).
We can’t but mention the opening of the first Russian
professional outlet center – Outlet Village Belaya Dacha. For
potential tenants, it was a risk to open a store in as the format
itself was absolutely new to Russia. It is too soon to estimate
the success of the project itself, but the tenants say their
results already prove the format is a success. Though initially,
many retailers felt pessimistic about outlet turnovers, factual
sales outdid the conservative forecasts. The first outlet center
now open, so retailers have positive expertise they can apply
when opening their stores in similar projects.
SUPPLY OF QUALITY RETAIL SPACE IN MOSCOW 2007-2012 SQ M
GLA/1000 CITIZENS *
* As of the year start
By the end of 2012 the total supply of modern retail space in
Moscow had reached almost 4m sq m (123 shopping
centers).
By the beginning of the 2013 amount of quality retail space in
Moscow reached 340 sq m per 1,000 residents.
As of early 2012, the provision level in Moscow decreased
slightly — which is partly due to the refined 2010 All-Russian
Census results published.
New shopping centers introduced and new administrative
districts added to the capital (Troitsk and Novomoskovsk,
jointly — TiNAD) changed the leasable area distribution in
Moscow by late 2012.
The largest share of leasable space in modern shopping
centers is located in the Southern, North-Eastern and
Northern administrative districts of Moscow (17.0%, 13.8%
and 12.3%, respectively). The share of South-Western district
lowered by 3% that ‘went’ to TiNAD (New Moscow). TiNAD
and Zelenograd have the least modern mall areas.
BREAKDOWN OF RETAIL SPACE SUPPLY BY MOSCOW
ADMINISTRATIVE DISTRICTS IN 2012
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
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DEMAND
According to the Moscow Statistics Authority, total retail
turnover in Moscow for the period January–November 2012
amounted to 3,204.2bln rubles ($103.1 bln), exceeding the
equivalent period in 2011 by 8.5% in comparable prices. 2012
promises to show the three-year high growth of this index.
Markets as a retail format again show decrease of goods sale
share. In 2012, it went 0.4% down YoY to make 19.6%. Given
the Russian capital’s retail market dynamics and volume, it
remains the most attractive market for both international and
federal retailers.
In 2012, Moscow welcomed over 20 international retail
brands, e.g. famous ones like Hamley’s (toys), Scotch&Soda
(clothes), Bath & Body Works (perfumery), MICHAEL Michael
Kors (clothes and accessories), Paul (café), Vera Wang Bride
(clothes, wedding dresses), Ballantyne (clothes), Harry
Winston (jewellery). Kilian perfumery brand opened its worldfirst mono-brand boutique in Moscow. The advent of
Debenhams department store and Hamley’s was of particular
importance for the market.
Debenhams in fact had previously worked in the country. It
opened in Moscow back in 2006; yet it closed after two years.
A new department store covering about 3,500 sq m opened in
Mega Belaya Dacha in September 2012. The company is
planning to open seven stores of 4,000 to 8,000 sq m each,
within the next five years.
MOSCOW RETAIL TURNOVER DYNAMICS IN 2006–2012*
* January–November 2012 retail turnover data for Moscow within its pre-July 2012 borders.
DEBENHAMS DEPARTMENT STORE OPENED IN MEGA BELAYA DACHA
Russia’s first Hamley’s opened at Evropeisky shopping
center, however the flagship store is planned to be opened at
Central Kids Mall on Lubyanka (Centralny Detsky Magazin na
Lubyanke),as Ideas4Retail, the company which develops the
chain in Russia signed a preliminary lease agreement with
Hals Development, the project developer, for 7,000 sq m. If
the lease contract is signed, the Russian flagship store of
Hamley’s will be the world’s largest.
The vast majority of coming international brands focus on
their presence in shopping centers, trying to reduce risks.
They mostly consider existing malls for their new stores. The
top five shopping centers preferred for pilot developments are
Evropeisky, Atrium, Metropolis, Mega Belaya Dacha, and
Mega Teply Stan. Still, such retail profiles as cafés and
restaurants as well as luxury brands tend to look for street
retail segment for both pilot and further projects.
International chains consider Russia one of the most
interesting markets. Despite the possible risks related to
entering new markets, the country’s potential prevails when
expansion directions are decided on. In 2013–2014, we’re
expecting a lot of new international names and major
openings. Those include Kidzania (entertainment center),
Rebel, Ferre, Takko Fashion, Collezione fashion, Penti
(clothes and accessories), Deichmann, Humanic (footwear),
Steak’n Shake, Krispy Kreme and Quiznos (cafés and
restaurants), and more. A number of larger international
players look closely at the Russian market to try and decide
on expansion options.
In 2012 the vacancy rate in Moscow shopping centers
averaged 2.7%. The main factors which led to the lowered
number are high demand from tenants and lack of quality
retail space due to slowed rates of new retail projects
commissioning.
VACANCY RATE DYNAMICS IN MOSCOW MODERN SHOPPING CENTERS
2009–2012
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
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AVERAGE RENTAL RATES IN MOSCOW SHOPPING CENTERS, 2012
RENTS
Average rates, USD/sq m/year
In 2012, the average rental rates in Moscow shopping centers
grew by 7 to 10%.
(excl. VAT and operating cost)
Tenant
Space, sq m
July 2012
December
2012
2
Rent rates for anchor tenants vary from USD150 to USD600
per sq m/year depending on the space size, profile and other
criteria. Lease contracts are signed for 10 to 25 years.
Maintenance payments for larger anchors average USD40 to
60 per sq m/year before VAT. For smaller anchor tenants, it is
USD80 to 120 before VAT.
The rental rates growth was noted in a number of segments
like city hypermarkets (end-of-year rates reached USD250 to
350 per sq m/year), supermarkets (USD400 to 600 per sq
m/year), kids’ goods stores (USD300 to 600 per sq m/year)
and multiplex (USD180 to 270 per sq m/year).
Rental rates for larger clothes stores range from USD300 to
500 per sq m/year.
Average rates for fashion gallery tenants, however, remained
stable. Rates vary from USD2,200–3,200 for smaller (under
50 sq m) shops to USD600–800 for larger (500–1,200 sq m)
stores. Contracts with fashion gallery tenants are typically
concluded for lease periods of 3 to 5 years. Maintenance
costs for these tenants usually range from about USD150 to
200 per sq m/year before VAT.
Lease rates average USD700 to 900 per sq m/year for
restaurants, USD1,200 to 1,800 for cafés, and USD1,800 to
2,300 for food court eateries. These tenants normally sign
contracts for five years with maintenance costs ranging from
USD170 to 220 per sq m/year before VAT.
INVESTMENTS TRANSACTIONS
In 2012 the Moscow retail property market saw a number of
larger investment transactions.
Romanov Property Holdings Fund purchased 40% of
Vremena Goda shopping center from Volksbank Real Estate
Austria. The center is a luxury one.
The Government of Moscow sold its share in Evropeisky mall
to its primary owners, God Nisanov and Zarakh Iliev affiliates.
Hypermarket
>8,000
150 – 250
150 – 280
Hypermarket
(city format)
4,000 – 8,000
200 – 280
250 – 350
DIY
>10,000
180 – 250
180 – 250
Supermarket
1,000 – 4,000
300 – 500
400 – 600
Electronics and
home appliance
stores
1,500 – 4,500
300 – 600
300 – 600
Sports goods
4,000 – 6,000
250 – 350
250 – 350
Sports goods
1,200 – 2,500
350 – 550
350 – 550
Kids stores
1,000 – 2,500
300 – 500
300 – 600
Clothes
1,500 –2,500
280 – 500
300 – 500
Multiplex
cinemas
2,500 – 4,000
150 – 220
180 – 270
500 – 1,200
600 – 800
600 – 800
250 – 500
800 – 1,200
800 – 1,200
100 – 250
1,200 – 1,700
1,200 – 1,700
50 – 100
1,700 – 2,300
1,700 – 2,300
<50
2,200 – 3,200
2,200 – 3,200
Restaurants
300 – 600
600 – 800
700 – 900
Coffee shops
150 – 300
1,000 – 1,500
1,200 – 1,800
Food court
50 – 100
1,700 – 2,000
1,800 – 2,300
Fashion gallery
INVESTMENT TRANSACTIONS IN THE MOSCOW RETAIL PROPERTY
MARKET, 2012
№
Nameame
Investor
GLA, sq m
1
Vremena Goda
Romanov Property
Holdings Fund
25,000
2
Evropeisky
Kievskaya Ploschad
65,000
3
Golden Babylon
Rostokino
IMMOFINANZ Group
170,000
Metromarket (near
Proletarskaya subway
station)
Atlant Capital Partners
2,500
4
Metromarket (near
Timiryazevskaya
subway station)
Atlant Capital Partners
5,600
5
6
Moscow Department
Store
Inzhspecstroy
10,500
7
Sokolniki
Holding-Center
12,000
8
Actor Gallery
SOFAZ
3,000*
Patero Development sold 50% of its 170,000 sq m Golden
Babylon Rostokino to IMMOFINANZ Group.
Besides, deals were closed for Sokolniki shopping center
(VTB sold 100% of it to Holding-Center); Moscow Department
Store (Inzhspecstroy bought 95% from Legacy Investment
House Ltd.); two Metromarket shopping centers (Atlant
Capital Partners purchased 100% from RB Investments) and
Actor Gallery retail and office center (acquired by SOFAZ —
State Oil Fund of Azerbaijan).
* GLA of the retail part.
2 All rental rates cited are VAT-exclusive and do not include operating expenses.
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
FORECAST
In 2013, the Moscow retail property market is set to get 9 new
modern shopping centers with 337,600 sq m GLA. The largest
th
of those will be VEGAS in Crocus City at 66 km of the
Moscow Ring Road (111,000 sq m GLA) and GoodZone at
Kashirskoye Highway (70,000 sq m GLA). If the opening
deadlines announced are observed for all these sites, the total
amount of new retail space offered in modern shopping
centers in 2013 will be twice that of 2012.
2012 saw a number of larger retail projects revived e.g.
Butovo Mall, Galaktika, Avia Park, Columbus, VEGAS, and
GoodZone.
Two new VEGAS malls are being developed in the Moscow
region. One of those is scheduled to open in Crocus City in
2013. The other one located by the Moscow Ring Road,
between Mozhayskoye and Rublevo-Uspenskoye Highways,
is to be commissioned in 2014.
In H1 2012, AMMA Development received a city development
plan for its Avia Park mall (the leasable part is totaling
236,000 sq m) to open in 2014.
Another recently ‘defrosted’ project is Galaktika by BIN Group,
revived in early 2012. This 700,000 sq m multifunctional
complex will include 90,000 sq m of retail space as well as a
large entertainment area to feature a Universal Studios theme
park.
In 2014, Butovo Mall (143,000 sq m GBA and 65,000 sq m
GLA) will be commissioned in the South-West of Moscow by
MD Group. The anchors including hypermarket, multiplex
IMAX cinema, home appliances store, sports store, kids'
goods shop and kids' entertainment center. The fashion
gallery will host 160+ shops.
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SHOPPING CENTERS TO BE COMMISSIONED IN 2013 IN MOSCOW
Name
Address
GBA,
sq m
GLA,
sq m
GoodZone
Kashirskoye highway,
belonging 12
120,000
70,000
RIO
Leninsky avenue, 109
75,000
40,000
Moskvorechie
Kashirskoye Highway,
24, bld. 12
30,000
19,500
Fashion House
Moscow Outlet
Center
Leningradskoye
Highway
35,600
28,800
Otrada, 3 phase
Pyatnitskoye Highway,
belonging 2
-
11,200
Vnukovo Outlet
Village, 1 phase
VEGAS Crocus City
Kievskoye Highway
29,736
16,584
MKAD, 66 km
283,000
111,000
Raykin Plaza
Sheremetyevskaya
Street, 8
70,000
35,000
Tropa
Profsoyuznaya Street,
belonging 118
7,800
5,500
th
* Note. The year of opening according to the schedule as of December 2012 or
in consideration of the works progress.
GALAKTIKA MULTIFUNCTIONAL COMPLEX
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
MAGAZIN MAGAZINOV
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MOSCOW RETAIL PROPERTY MARKET REPORT 2012
MAGAZIN MAGAZINOV
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MOSCOW RETAIL PROPERTY MARKET REPORT 2012
MAGAZIN MAGAZINOV
SUPPLY
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HOTEL METROPOL
On the whole, supply level in the Moscow street retail
segment has remained stable during the last few years.
MAGAZIN MAGAZINOV considers 17 key retail streets in
Moscow with the total leasable space of 250,000 sq m.
Major retail streets are situated in the city center (excluding
Kutuzovsky Avenue, Mira Avenue, Leninsky Avenue and
Profsoyuznaya Street).
In 2012 Moscow's premium retail market witnessed a
significant event: the increase of space in the street retail
segment due to the entry of Hotel Metropol, a historical
and architectural landmark of Russia. The package of
offers includes 17 exclusive luxury boutiques with the total
leasable area of 4,000 sq m and space formats of 15 to
1,600 sq m.
STRUCTURE OF DEMAND FOR STREET RETAIL SPACE IN MOSCOW 2012
DEMAND
Demand for high quality spaces in retail streets has
remained stable. The vacancy rate in 2012 ranged from 3
to 4%.
2012 was a successful year for the street retail segment. It
was more dynamic and saw a larger number of requests
than the year 2011. Tenants that contributed most to the
development of street retail format were dining facilities,
banks, food chains and service enterprises.
Cafés and restaurants rank first in the structure of demand
for street retail spaces in 2012 (33.9%), followed by banks
(17.7%) and food stores (13%). In the services sector
which comprised 6.5% of all the requests, beauty salons
and medical centers provided for most of the demand.
The fewest number of requests for street retail spaces in
2012 came from pharmacies and eyewear stores, telecom
operator retail shops, home appliances and consumer
electronics sellers, accessories stores, cosmetics and
perfumery stores and kids' shops. In total, requests for
these profiles comprise about 7%.
The most sought-after are smaller spaces below 150 sq m
and large-format spaces over 1,000 sq m. The former are
in short supply because street retail spaces with the area
of 50 to 150 sq m are in great favor while the market offers
mainly medium-format spaces of 200 to 1,000 sq m. The
deficit in the latter is due to insufficient liquidity of largeformat spaces.
THE STRUCTURE OF DEMAND FOR STREET RETAIL SPACE, 2012
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
Last year's demand structure for street retail space was
different from that of the previous time periods. The major
trend of 2012 became the decline in the number of
requests from clothing and footwear stores. This decline is
particularly obvious when compared to the results of 2011
(10.5% of the total number of requests as compared to
23.9% respectively). In contrast, the number of requests
from cafés, restaurants and banks has been growing
during the last three years.
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DYNAMICS OF DEMAND FOR STREET RETAIL SPACE 2012
In 2012 the street retail segment saw several landmark
rental transactions. Nestlé Nespresso SA rented a space
of 534 sq m for its Nespresso boutique in Tverskaya
Street. This Nespresso boutique that opened in December
th
became the brand's 300 boutique globally. In 2012 in the
same building a unit of 1,700 sq m was rented by the
Reserved flagship store.
Other landmark events of 2012 worth mentioning are the
openings of flagship boutiques by Prada (Stoleshnikov
Lane) and Chanel (Petrovka Street). Though these brands
have been presented in Russia for a long time, the two
new boutiques deserve particular note because they were
opened directly, with no Russian franchisees participating.
Vera Wang Bride opened its flagship boutique in
Kuznetsky Most Street.
AVERAGE RENT RATES FOR RETAIL STREETS IN MOSCOW, AS OF LATE 2012
Street name
Average rent rates for spaces
of 150–200 sq m, USD/sq
m/year (excluding VAT)
Q4 2011
Q4 2012
Bolshaya Dorogomilovskaya Street
1,800 – 2,500
2,000 – 3,000
Kuznetsky Most Street
2,500 – 4,000
3,000 – 4,000
Kutuzovsky Avenue (from the city center to
the Third Ring Road)
1,800 – 3,000
2,000 – 3,000
Leninsky Avenue (from the city center to the
Third Ring Road)
2,000 – 3,000
2,000 – 3,000
Maroseyka Street
2,000 – 3,000
2,800 – 3,200
Myasnitskaya Street (from the city center to
Chistoprudny Boulevard)
1,500 – 2,000
1,800 – 2,200
Nikolskaya Street
2,000 – 2,500
2,500 – 3,000
Novy Arbat Street (from the city center to
Novinsky Boulevard)
2,000 – 3,000
2,500 – 3,000
Petrovka Street
3,500 – 4,500
3,500 – 4,500
Mira Avenue (from the city center to the Third
Ring Road)
1,000 – 2,000
1,500 – 2,000
Pokrovka Street (from the city center to
Chistoprudny Boulevard)
1,500 – 2,000
1,500 – 2,000
FORECAST
Stary Arbat Street
2,000 – 3,000
2,500 – 3,000
Given the current level and structure of demand for street
retail spaces located in the major retail streets of Moscow,
MAGAZIN MAGAZINOV forecasts a slight increase in
average rent rates in this segment during the year 2013.
Stoleshnikov Lane
4,000 – 6,000
4,000 – 6,000
Tverskaya Street (even numbers – from
Okhotny Ryad to Pushkinskaya Square)
5,000 – 7,000
5,000 – 7,000
Tverskaya Street (odd numbers – from
Okhotny Ryad to Pushkinskaya Square)
3,000 – 4,500
3,000 – 4,500
Tverskaya Street (even numbers – from
Pushkinskaya Square to Mayakovskaya
subway station)
3,000 – 4,500
3,000 – 4,500
RENTS
The second half of 2012 saw increase in the average rent
rates for the existing deals in many retail corridors.
Meantime, the highest average rent rates still remain in the
following retail streets: USD3,500 to 4,500 per sq m/year in
Petrovka Street, USD4,000 to 6,000 per sq m/year in
Stoleshnikov Lane, USD5,000 to 7,000 per sq m/year in
Tverskaya Street (all figures exclude VAT).
As a rule, street retail lease contracts are signed for the
period of 3 to 5 years with the rent rates indexed by 5–10%
on a yearly basis.
Analysis based on the results of research studies performed by MAGAZIN MAGAZINOV, including quarterly monitoring of the Moscow retail property market, actual deals and expert estimates of market
trends. Images and photographs were taken from the following websites: www.crocusgroup.ru, www.ideas4retail.ru, www.podium-market.com, www.chapmantaylor.com, www.moscowbars.ru ,
www.genlex.ru
MOSCOW RETAIL PROPERTY MARKET REPORT, 2012
МAGAZIN MAGAZINOV
Page 12 of 12
CONTACTS:
Head of Research and Consulting
Andrey Vasyutkin
[email protected]
Retail Expansion Support
Narmina Gorina
[email protected]
Ksenia Grevtsova
[email protected]
Business Development Director
Maksim Mankevich
[email protected]
Managing Director
Dmitry Burlov
[email protected]
40/2 Prechistenka, Moscow 119034 Russia
Tel: +7 (495) 790-00-00
Fax:+7 (495) 725-26-65
www.magazinmagazinov.ru
[email protected]
MAGAZIN MAGAZINOV is a leading retail property consultant for Russia. Offers a comprehensive package of
services for retailers, retail property developers and owners in Russia. Provides in-depth market analysis for
shopping center industry and retailers (including geo-marketing research), shopping center concept design, retail
agency services (landlord and tenant representation), shopping center marketing and leasing, retail project
promotion, etc.